Andy McDonald MP, Labour’s Shadow Transport Secretary writes to Chris Grayling about chaos surrounding the cancelling of Seaborne Freight’s contract.
Following cross-party calls for Theresa May to sack Secretary of State for Transport, Andy McDonald has written to Chris Grayling calling on him to come clean about his role in this scandal and why his department gave the contract to Seaborne Freight in the first place.
He writes that he ‘was not alone in being astonished that you awarded a £14 million contract to a company with no money, no ships, no track record, no employees, no ports, one telephone line, and no working website or sailing schedule.’
Andy McDonald demands that Chris Grayling explain why he claimed Seaborne Freight ‘would be able to provide an immediate service in the event of a no deal Brexit’ when all the evidence contradicted this and the decision to cancel the contract proves it.
He also highlights how ‘due diligence did was not, in any way, shape or form, undertaken satisfactorily.’
Rt Hon Chris Grayling MP
Secretary of State
Department for Transport
Great Minster House
33 Horseferry Rd
London, SW1P 4DR
10 February 2019
Dear Secretary of State,
I wrote to you about Seaborne Freight on the 10th January and you failed to address the issues raised in my letter.
Now you have finally cancelled the contract of Seaborne Freight you appear to be attempting to act like this is the end of the matter. However, there are still a number of serious questions to answer.
I thought it might be helpful to put my concerns in writing to you again, in the hope that you will finally take some responsibility for your failure and answer them.
I was not alone in being astonished that you awarded a £14 million contract to a company with no money, no ships, no track record, no employees, no ports, one telephone line, and no working website or sailing schedule.
Why did you claim that the company would be able to provide an immediate service in the event of a no deal Brexit, when today’s announcement clearly contradicts this? When did you finally realise they wouldn’t be able to deliver on their contract? What conversations were had across Whitehall which finally led you to that decision?
Two of Seaborne Freight’s directors would not pass normal due diligence requirements. One of them, Ben Sharp, is allegedly under investigation for wrongdoing. Mr Sharp quit his business activities in the Gulf with a trail of debt in excess of a million dollars behind him. His company, Mercator, was merely a chartering outfit finding vessels for security companies.
Did your Department consult other government departments about Mr Sharp’s fitness as a company director? And is it correct that he operated without the appropriate licence needed pursuant to the Export and Control Act 2008? Yes or no?
How is it that Deloitte, Slaughter & May, Mott MacDonald were instructed to restrict their due diligence examination to the face value of the presentation put to them by Seaborne Freight? Why did they restrict their investigation to the present company and not the trading history of the individuals concerned and in particular Ben Sharp?
Can you also confirm if Ben Sharp has been employed by the Department for Transport as an independent expert on ferries? If so, can you provide further details of his relationship with your office?
You failed to answer questions about who is paying for the dredging of Ramsgate. The proposed dredging is not deep enough, the berths at the port are too short and the approach channel is too narrow. Did these factors not make you doubt Seaborne Freight’s ability to provide the service? Do you recognise that a future operator won’t be able to deliver a service from Ramsgate as well?
You awarded Seaborne Freight the contract under a Negotiated Procedure. You effectively gifted the company the work without any form of competition.
According to the Public Contract Regulations 2015, Part 2, Chapter 2, Section 3, Regulation 32.2.4 (5), a legal provision designed to ensure the Public Sector spends its money in a way that is fair, transparent and legal, the only justifiable reason for using the Negotiated Procedure is that “the circumstances invoked to justify extreme urgency must not in any event be attributable to the contracting authority.”
However, the threat of a no deal is the fault of the contracting authority, the British Government, in this case. The justification for use of a negotiated process in this instance is, at best, barely legal, if it is legal at all. The use of such a standard governance structure would normally require a Project Specific Procurement Control Document that would be approved by the relevant Director or Head of Procurement and at a value like this, would almost definitely require approval at Board and Chief Executive Level. Please can you confirm if such a document exists and who in the Department approved it.
There is also no evidence that an evaluation process took place. It is quite clear that Seaborne Freight should have been immediately disqualified as unsuitable. The company’s asset value is less than a quarter of one percent of the total value of the contract, yet best practice guidelines states that any one single contract should be no more than a 33-40% of the firm’s total turnover, alongside a healthy credit rating and a proven track record of at least three years of similar sized operations.
For Seaborne Freight to have been considered by any competent Procurement Professional to be even in the running, they would normally have a turnover of 15m or more for £5m per annum of work, have at least one successful similar operation, and a strong credit rating. They had none of these. Despite your claims, due diligence did not, in any way, shape or form, occur satisfactorily.
I look forward to your reply. It is imperative that we have answers by Tuesday given the immediacy of next week’s vote and the threat of a no deal posed by the Prime Minister.